DJI + S&P 500 - Could it be a top?

DJI yesterday made a small new top, while no other indices did that. It could be a indication that the wave 2 correction is over, but no matter what it is a sign of weakness.

As can be seen below the S&P 500 didn't make a new top alongside DJI. If this turns out to be a top, the we had a Truncated fifth wave in the S&P 500.

A break below 10,264.85 and 1,088.86 would add confidence the bearish case, as what should have been wave 4 will enter the area of wave 1, which is not allowed under the EWP.

My preferred count is still that we will one more rally higher, but be aware of this possibility.

DJI and S&P 500 - Wave E of the Expanding Diagonal can end any time now

Wave E have now broken slightly above the Expanding Diagonal resistance line, which will mark a typical exhaustion signal. A close back below the resistance line will confirm the exhaustion, while a break below short term key support at 10.948,08 will confirm the top.

Looking at the S&P 500, the picture is identical. A close below the Expanding Diagonal resistance line will confirm exhaustion, while a break below short term support at 1.188,91 will confirm the top.

The VIX-Index (see the chart below) close below the lower Bollinger band has confirmed the bearish set-up for the equity markets and it's just a matter of time before a top will be found.

Only question that will remain is if this is the "BIG" top or just a short term top. I personaly will trade it as the "BIG" top ending wave [B], but time will show. The uptrend since March 9, 2009 has been a very hard to deciffer, but for me it's not a question if this is a bearmarket rally or a impulsive five wave rally. The uptrend eventhough it has been impresive in many ways is way top sloppy top be counted as an impulsive five wave rally. Take a look at the supposed wave 3. The Elliott Wave Principle stats that wave 3 are "wonders to behold", this wave 3 is absolutly no wonder to behold.

S&P 500 and the DJI - Top in place ?

The S&P 500 index not only blew the Expanding Diagonal, but also rallied past the ideal point where wave c would equal wave a in length. Lokking at the DJI it ended almost perfectly at the point where wave c where equal in length to wave a. The Expanding Diagonal is still very much a live. Finally seen from a timing point of view we needed a couple days more than the ideal timeframe, but that is not the most important issue - FORM IS ALWAYS MORE IMPORTANT!

It's still very early, but I will risk calling a top here. If it's the final top is still too early to tell. But we are way overbourght here, we have Negative Divergence on all indicators, so it might be the final top.

DJI and S&P 500 - Is close to end wave 2

In my post regarding DJI and the S&P 500 index, I wrote that we could have seen a top in wave 2, but prices was not allowed to break above 10,392.68 for the DJI and 1,111.13 for S&P 500 as that would call for one more rally above 10,438.40 in wave v of C for the DJI and a final rally higher towards 1,120.52 for the S&P 500.

If this wave 2 rally goes to its extrem we could a test of 10,538.24 for the DJI and 1,133.67 for the S&P 500.

Nothing has changes in the bigger picture, which still calls for a wave 2 top soon and the beginning of wave 3 down.

DJI and S&P 500 - close to finish sub-wave ii ?

As the first chart I have shown DJI on a hourly basis. It looks like a series of ones and twos are playing out currently. If this picture is true there is much more room towards the up-side that the current rally from 10,185.98 can win, therefor a top is expected shortly for a break below 10,272.44 as sub-wave iii gains momentum.

A break above 10,393.13 will alter this picture and make it look like a 3-wave correction calling for a new move higher towards 10,438.40 and above, before black circle wave 2 is finished.



Moving in closer the above chart shows the S&P 500 on a 5 min. basis. As can be seen sub-wave 2 has become an irregular and wave 5 of c lookes like a ending diagonal. I would expect a small spike above the diagonal resistance-line, before sub-wave 3 down kicks into action for a move closer to 1,075 and problably closer to the 1,056 area.

Only a break above 1,112.21 would alter this picture and call for a sligthly higer high before ending wave 2.